Cliff Nicholls runs two trampoline parks and indoor play centres: one in Tamworth in the West Midlands, the other in Bolton, Greater Manchester. He’s already feeling the pressure from the government’s latest budget measures and has been forced to abandon further investment plans.
“The national minimum wage increases coming in April, combined with the reduced thresholds for national insurance and the increased rate of employers’ national insurance, will have a very significant impact,” Cliff said.
To cut costs, he’s already made drastic changes. “We’ve had to take some fairly radical decisions, reducing our opening hours, making a senior staff member redundant because of rising business costs, including business rates and national insurance,” he added.
Image: Cliff Nicholls
While policies like the National Living Wage (NLW) increase are designed to support low-paid workers, other changes could offset these benefits.
One major shift is the reduction in the salary threshold at which businesses start paying employer’s national insurance contributions (NICs).
Currently, employers begin paying NICs when an employee earns more than £9,100 per year. From April 2025, this threshold will drop to £5,000. At the same time, the employer’s NI rate will rise from 13.8% to 15%.
Scroll through to see Cliff’s staffing finances
Under the new system, an employer will be paying nearly £800 more in NICs annually for an employee earning around £23,800 (based on a 37.5-hour week at the new NLW).
The rise in NICs will be proportionally higher for employers of lower-paid workers. For example, they will pay around 7% for someone earning £9,000 a year and 3% for an employee on the NLW. But for someone earning £75,000 a year, employers will pay 2% more.
Extended employment rights and business rates add pressure
Labour also announced a series of employment rights reforms aimed at improving working conditions. These include extending statutory sick pay to lower-paid employees who were previously ineligible and making it available from the first day of illness for all workers.
The changes would also enable employees to claim unpaid parental leave from their first day in a job, strengthen protections against unfair dismissal, and enhance rights for those on zero-hours contracts.
The government estimates that these employment rights changes will cost businesses around £5bn.
Nye Cominetti, principal economist at the Resolution Foundation, said: “What concerns me is that employer national insurance increases, like the minimum wage and employment rights changes, disproportionately impact low-paid workers.
“For instance, extending statutory sick pay to those previously ineligible adds costs for employers already facing higher NICs and rising wages. In this context, it would have been more sensible to raise tax revenue in a way that didn’t hit low-paid workers the hardest.”
Image: Cliff is having to abandon expansion plans due to budget changes
But for Cliff, the changes to business rates relief are an even bigger challenge. Budget changes will mean business rates relief will drop from 75% to 45% for retail, leisure, and hospitality businesses, significantly increasing his costs.
“The business rates changes probably have a bigger impact on us than national insurance,” he explained.
“One of our buildings used to be in a prime edge-of-town retail park 25 years ago. The rental value has dropped significantly since but business rates haven’t kept pace. Next year, we’ll be paying between £55,000 and £60,000 more just in business rates.”
Cliff is not alone in his concerns.
Research conducted by the Federation of Small Businesses found that in the final three months of last year, confidence among small firms fell to its lowest level in a decade, excluding the pandemic.
Are these changes impacting inflation?
Higher prices for food, goods, and services will also put pressure on working people.
New data from the Office for National Statistics shows that inflation rose to 3% in January 2025, the highest level in 10 months.
Many businesses had warned this would happen, saying that rising national insurance costs and the increase in the NLW would leave them with no choice but to raise prices.
The latest Quarterly Economic Survey by the British Chambers of Commerce, conducted after the budget, surveyed more than 4,800 businesses. It found that more than half expect to increase prices in the next three months, up from 39% in the third quarter of 2024.
Businesses are making tough decisions
Signs of pressure are already emerging.
Lord Wolfson, a Conservative peer and chief executive of Next, has warned that it will become harder for people to enter the workforce.
In an interview with the BBC, he said that the rise in NICs for businesses would hit the retail sector particularly hard, with entry-level jobs most affected.
He urged the government to phase in the tax changes rather than implement them in full in April, warning that otherwise, businesses would be forced to cut jobs or reduce working hours.
While it is not possible to fully attribute this to budget announcements, early data suggests that the workforce has been shrinking across various industries since October 2024, with the biggest declines in sectors that employ large numbers of lower-paid workers, such as manufacturing, retail, and hospitality.
Since the budget, the number of payrolled employees has fallen by more than 10,000 in manufacturing and nearly 9,000 in hospitality.
Since the budget, voluntary liquidations have remained consistently high and from December 2024 to January 2025 voluntary business closures have gone up by 9%.
While this can’t be solely attributed to upcoming budget measures, it does highlight the challenges businesses are facing and the difficult decisions they are making as a result.
An HM Treasury spokesperson said: “We delivered a once-in-a-parliament budget to wipe the slate clean and deliver the stability businesses need to invest and grow, while protecting working people’s payslips from higher taxes, ensuring more than half of employers either see a cut or no change in their National Insurance bills, and delivering a record pay boost for millions of workers.
“Now we are going further and faster to kickstart economic growth and raise living standards, with a majority of business leaders confident that the chancellor’s plans will help drive business investment.
“This includes backing businesses to create wealth across Britain by capping corporation tax, making full expensing permanent and permanently cutting business rates for retail, hospitality, and leisure businesses on the high street from next year.”
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At least 13 people may have taken their own lives after being accused of wrongdoing based on evidence from the Horizon IT system that the Post Office and developers Fujitsu knew could be false, the public inquiry has found.
A further 59 people told the inquiry they considered ending their lives, 10 of whom tried on at least one occasion, while other postmasters and family members recount suffering from alcoholism and mental health disorders including anorexia and depression, family breakup, divorce, bankruptcy and personal abuse.
Writing in the first volume of the Post Office Horizon IT Inquiry report, chairman Sir Wyn Williams concludes that this enormous personal toll came despite senior employees at the Post Office knowing the Horizon IT system could produce accounts “which were illusory rather than real” even before it was rolled out to branches.
Sir Wyn said: “I am satisfied from the evidence that I have heard that a number of senior, and not so senior, employees of the Post Office knew or, at the very least, should have known that Legacy Horizon was capable of error… Yet, for all practical purposes, throughout the lifetime of Legacy Horizon, the Post Office maintained the fiction that its data was always accurate.”
Referring to the updated version of Horizon, known as Horizon Online, which also had “bugs errors and defects” that could create illusory accounts, he said: “I am satisfied that a number of employees of Fujitsu and the Post Office knew that this was so.”
The first volume of the report focuses on what Sir Wyn calls the “disastrous” impact of false accusations made against at least 1,000 postmasters, and the various redress schemes the Post Office and government has established since miscarriages of justice were identified and proven.
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3:28
‘It stole a lot from me’
Recommendations regarding the conduct of senior management of the Post Office, Fujitsu and ministers will come in a subsequent report, but Sir Wyn is clear that unjust and flawed prosecutions were knowingly pursued.
“All of these people are properly to be regarded as victims of wholly unacceptable behaviour perpetrated by a number of individuals employed by and/or associated with the Post Office and Fujitsu from time to time and by the Post Office and Fujitsu as institutions,” he says.
What are the inquiry’s recommendations?
Calling for urgent action from government and the Post Office to ensure “full and fair compensation”, he makes 19 recommendations including:
• Government and the Post Office to agree a definition of “full and fair” compensation to be used when agreeing payouts • Ending “unnecessarily adversarial attitude” to initial offers that have depressed the value of payouts, and ensuring consistency across all four compensation schemes • The creation of a standing body to administer financial redress to people wronged by public bodies • Compensation to be extended to close family members of those affected who have suffered “serious negative consequences” • The Post Office, Fujitsu and government agreeing a programme for “restorative justice”, a process that brings together those that have suffered harm with those that have caused it
Regarding the human impact of the Post Office’s pursuit of postmasters, including its use of unique powers of prosecution, Sir Wyn writes: “I do not think it is easy to exaggerate the trauma which persons are likely to suffer when they are the subject of criminal investigation, prosecution, conviction and sentence.”
He says that even the process of being interviewed under caution by Post Office investigators “will have been troubling at best and harrowing at worst”.
The report finds that those wrongfully convicted were “subject to hostile and abusive behaviour” in their local communities, felt shame and embarrassment, with some feeling forced to move.
Detailing the impact on close family members of those prosecuted, Sir Wyn writes: “Wives, husbands, children and parents endured very significant suffering in the form of distress, worry and disruption to home life, in employment and education.
“In a number of cases, relationships with spouses broke down and ended in divorce or separation.
“In the most egregious cases, family members themselves suffered psychiatric illnesses or psychological problems and very significant financial losses… their suffering has been acute.”
The report includes 17 case studies of those affected by the scandal including some who have never spoken publicly before. They include Millie Castleton, daughter of Lee Castleton, one of the first postmasters prosecuted.
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1:34
Three things you need to know about Post Office report
She told the inquiry how her family being “branded thieves and liars” affected her mental health, and contributed to a diagnosis of anorexia that forced her to drop out of university.
Her account concludes: “Even now as I go into my career, I still find it so incredibly hard to trust anyone, even subconsciously. I sabotage myself by not asking for help with anything.
“I’m trying hard to break this cycle but I’m 26 and am very conscious that I may never be able to fully commit to natural trust. But my family is still fighting. I’m still fighting, as are many hundreds involved in the Post Office trial.”
Business Secretary Jonathan Reynolds said the inquiry’s report “marks an important milestone for sub-postmasters and their families”.
He added that he was “committed to ensuring wronged sub-postmasters are given full, fair, and prompt redress”.
“The recommendations contained in Sir Wyn’s report require careful reflection, including on further action to complete the redress schemes,” Mr Reynolds said.
“Government will promptly respond to the recommendations in full in parliament.”
The UK’s public finances are in a “relatively vulnerable position”, the government’s official forecaster has warned.
The Office for Budget Responsibility (OBR) cited a drag from successive economic shocks, recent U-turns on spending cuts and higher-than-expected policy commitments.
It sounded alarm over the projected path for debt as a result, in its annual fiscal risks and sustainability report.
It saw total debt above 270% of gross domestic product (GDP) by the early 2070s – up from a current level of 96.5% – declaring that rising debts have led to “a substantial erosion of the UK’s capacity to respond to future shocks”.
The OBR’s report highlighted damage from the COVID pandemic and cost of living crisis that followed Russia’s invasion of Ukraine.
But it raised fears that past and current government policies were further harming the sustainability of the public finances.
More from Money
The report said that the pension triple lock, for example, was now estimated to cost £15.5bn annually by 2029-30.
That was “around three times higher than initial expectations”, it said.
The lock, which rises each year in line with inflation, wage growth or 2.5% – whichever is higher – had risen by more than the 2.5% base in eight of the 13 years of operation to date, the report stated.
The watchdog said it reflected more volatile inflation than expected.
It also picked up on the latest government U-turns over planned welfare and winter fuel payment cuts in the face of rebellions by Labour MPs.
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9:11
Welfare U-turn ‘has come at cost’
The decisions are expected to leave Chancellor Rachel Reeves facing a black hole of £6.75bn while weaker-than-expected economic growth could add a further £9bn to that sum in the run-up to the autumn budget, according to Sky News projections that see a void of around £20bn.
The OBR highlighted future risks from rising defence spending and the impact of climate change.
Public sector pay demands could also prove a drag, with resident doctors voting in favour of strikes over pay.
While ministers acknowledge damage to the public purse from the U-turns, Ms Reeves has repeatedly ruled out a new wave of borrowing to fund a spending spree.
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1:56
Could the rich be taxed to fill black hole?
As such, the government has not ruled out the prospect of some form of wealth tax to help meet its commitments despite the top 1% of earners contributing almost a third of all income tax already – on top of other targeted taxes such as capital gains.
The report said: “Efforts to put the UK’s public finances on a more sustainable footing have met with only limited and temporary success in recent years in the aftermath of the shocks, debt has also continued to rise and borrowing remained elevated because governments have reversed plans to consolidate the public finances.
“Planned tax rises have been reversed, and, more significantly, planned spending reductions have been abandoned.”
Shadow chancellor Mel Stride said of the report: “The OBR’s report lays bare the damage: Britain now has the third-highest deficit and the fourth-highest debt burden in Europe, with borrowing costs among the highest in the developed world.
“Under Rachel Reeves’ economic mismanagement and Keir Starmer’s weak leadership, our public finances have become dangerously exposed – vulnerable to future shocks, welfare spending rising unsustainably, taxes rising to record highs and crippling levels of debt interest.
“Labour’s recklessness risks it all – your pension, your job, your home, your savings.”
A Number 10 spokesman said: “We recognise the realities set out in the OBR’s report and we’re taking the decisions needed to provide stability to the public finances.”
The UK will miss the White House-imposed deadline to agree a trade deal on steel and aluminium this week, according to insiders from government and industry.
Donald Trump had insisted that unless Britain could finalise the details of its metals trade deal with the US by 9 July, he would raise the tariffs faced by steel and aluminium imports from the 25% the UK currently pays to the 50% paid by other countries. If it could seal the deal, those tariffs could drop to zero.
However, despite weeks of negotiations and promises that the deal would be completed by the end of June, talks have foundered on two key issues. First, the US is insisting that only steel “melted and poured” in the UK (in other words, forged in blast furnaces or electric arc furnaces) can be included in the deal. However, one of Britain’s biggest steel exporters to the US, Tata Steel, is not melting and pouring its UK steel because of the closure of its blast furnaces.
Government insiders have told businesses they still expect to have a deal done by the end of this month, and that they are confident the White House will not impose the 50% tariffs for the time being. They say one of the chief challenges they face is that the administration is so overwhelmed by attempts to negotiate with other countries that they lack the bandwidth to deal with the small print on Britain’s deal.
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3:31
Inside the UK’s last blast furnaces
“As far as the Americans are concerned, the UK is already a done deal,” said one person close to the negotiations. The problem is that while a deal has been done on car and aerospace exports to the US, the metals element of the trade agreement is still some way from being signed. In the meantime, steel exports continue to incur tariffs – albeit lower than those imposed on other countries around the world.